In the US a number of states have started to cut unemployment benefit even while unemployment remains high, and here in the UK, George Osborne thinks it is a good idea to lengthen the time newly unemployed people must wait before claiming benefits. At the same time, Jobcentre Plus will start hauling in about 50% of job seekers for weekly interviews. Many people suspect this is designed to find more excuses to sanction claimants and strip them of their benefits. This seems to rest on the theory that if the unemployed cannot rely on the state for subsistence levels of support, they will be more motivated to find work. As an antidote to that viewpoint, here’s an extract from a blog by Professor Bill Mitchell discussing the situation in the US. It equally applies here:
“…there is no credible theory that relates starvation with an increased capacity to gain employment when the economy is some millions of jobs short of the level necessary to provide work for all those who desire it.
Forget the smallest margin of unemployed who do not want to work. They are of a second-order of smallness that doesn’t warrant attention. The overwhelming majority (comprising millions of citizens) want to work but cannot find work because it is not to be found.
Why not? Because there is a lack of spending in the economy. Firms create employment in response to demand for their products. They might be confronted by millions of desperately hungry workers who have just had their benefits cut but they still won’t put them on because there is insufficient demand to justify expanding production.”